Employees can be some of your company’s greatest assets. However, they can also be high-risk investments. In a high-tech setting, the knowledge an employee gains at your company could be used against you—unless you engage a non-compete agreement.

Why you need a non-compete agreement

You should consider using a non-compete agreement when revealing proprietary knowledge or sharing trade secrets with employees. If you deal with intellectual property in any way, a non-compete is an excellent idea.

Elements of a successful and binding non-compete agreement

  • The employee must receive something in exchange for their promise not to compete. Usually, this just means they are receiving an employment contract. However, be aware that if you are having an employee sign a non-compete after their employment has begun, you will have to incentivize the agreement with something else, as they’ve already secured employment. This will ensure that your agreement is legally binding in court.
  • The promise must protect something that legitimately belongs to the business. This is where the competition bit comes into play. This promise is meant to protect the original business from an employee starting a similar endeavor and competing with it. The knowledge in question must be worthy of protection, however, to be valid in court. You have to prove that the information gives the possessor a real advantage in the marketplace.
  • The agreement must, above all, be reasonable. You can’t ask an employee to refrain from pursuing other work in the same industry. Your restrictions should be fair and logical with regards to geography, time, and scope.

If you are considering using a non-compete agreement, know that it has rigorously follow these guidelines. Consult an attorney about the proper construction of this document and all necessary components.